Teaching You Finance: February 2021

Robo Advisor

Making Money While You Sleep With Syfe (Robo Advisor)

By Marcus Seetoh - February 21, 2021

I will be covering the 2nd Robo-Advisor that I am using current which is Syfe.

If you have not read my previous blog article on Stashaway, click here to find out more. 😊

1. In summary

A hands-off approach to invest passively with someone in the company (an advisor) purchasing and auto-balancing your portfolio on your behalf. All you need is to top up money and set your goals & parameters to begin.

2. Competitive Advantage

Similar to Stashaway, each Robo-Advisor advocates their own strategy in managing your funds. Syfe uses the Automated Risk-Managed (ARI) investment strategy to provide you with the maximum possible returns and minimum possible loss. To find out more click here.
In simple terms, its an all weather investment framework to diversify your investments into clusters of stocks, bonds, commodity, real estates, gold etc.

3. How was it so far?

I have been using Syfe since May 2020.
The returns are good for me but I have lost money using this application if you deposit too little money inside eg. <$500 SGD.
If you do investing for at least 6 months or 1 year, you will notice that majority of the good stocks, bonds investment products do not come cheap. 1 unit of an asset can cost a few hundred dollars at the minimum.
If you deposit small amounts like 100 SGD or 300 SGD, Syfe will perform fractional investing for you, meaning you buy a portion of a single unit of an asset. As the amount you own is so little, it will take a super long time before you can start to see growth and gains with that small amount of asset.
Syfe have 4 different portfolios which I have already tried them all. Mainly the 'Global ARI', 'REIT+', 'Equity 100' and 'Cash+'.
From my experience, its not about the number of investment preferences and variety that they let you choose. Is whether do you have the money or not to do this. If you have the money, then all 4 portfolios will work well actually.

Syfe Global ARI Portfolio

Provide diversifications to multiple stocks, bonds, gold etc asset classes. Your amount of money is split by % into the different asset classes. There could be 20+ different assets that they will use for this.

Thus, do not use this portfolio if the amount you want to deposit is less than 1000 SGD in value.

Imagine putting in 500 SGD and this amount is divided and split into the 20+ different asset class with some asset classes only containing 50 SGD which is just fractional investing. You stop for a moment and think whether is this the best way to invest in your opinion if you think about it? The answer is of course no! 😑

Yes, there is no right or wrong in how much you are depositing. When I first started using this portfolio, I DCA 50 SGD monthly and my portfolio performance was just horrendous. The growth was slow, it remained negative for a few months before I started to see some positive returns.

As it invest in 20+ different assets, its considered a less risky product and of course the returns will be lower.

My ARI Global Portfolio before I exited

Syfe REIT+ Portfolio

What Syfe did in this portfolio is to handpick and purchase all the better quality Real Estate Investment Trusts (REITS) in the Singapore market and put them all into a basket of stocks to create an ETF which is called REIT+.

This REIT+ is suppose to follow as close as possible to the performance of an actual ETF in the Singapore stock market called the SGX's iEdge S-Reits.

Again, please do not use this portfolio if the amount you want to deposit is less than 1000 SGD in value as this will result in fractional investing.

Yes, there is no right or wrong in the amount you want to deposit. But taking one example to show you and let you understand what is happening. Acendas REITs stock is priced at 3.05 SGD per unit as of 19th Feb 2021. In Singapore, minimum lot purchase is 100 units of stocks. Meaning if you want to just buy one lot of Acendas REITs, you have to pay 100units * 3.05 SGD = 305 SGD

REITs are dividend stocks and not growth stocks in nature so their prices will not appreciate and will remain constant for many years. How we earn money from holding REITs is mainly from their dividend payouts.

Imagine putting in 500 SGD into this REIT+ portfolio and they for example (just a sample to show illustration) purchase 0.5 units of Acendas stocks on your behalf. Can you tell me how much dividend payout can you receive from just holding 0.5 units of Acendas stocks? 😂😂😂

Acendas year 2020 dividend payout is about 5.42% per annum or equivalent to 0.165 SGD per stock unit (Dividends.sg), by holding a 0.5 units of Acendas, you will at most be receiving 0.165 SGD / unit *0.5units = 16.5 SGD of dividends for the year holding this.

Do you think earning 16.5 SGD per year is a good return? You might be better off here than putting your money in your usual savings account in the bank but obviously the returns are not fantastic to be honest hahahah.

REITS stock works best when you are holding a substantial amount of shares of these companies so that when there is a dividend payout, you will receive more money in direct proportion to the amount of shares you owned. Those that invested in REITs for some time will understand where I am coming from hahahaha.

Remember, you do not earn money from their share prices as it will remain stagnate for many years.

That's the reason I decided not to continue using this portfolio as you require to deposit alot of money minimum 3k to 5k in order to justify a small return.

My REITs portfolio before I exited

Syfe Equity 100 Porfolio

By far the best porfolio that Syfe has in my opinion. Its much better than the Global ARI as it focuses mainly on equities only and there are no bonds and gold etc so the returns are much higher, same goes to the risk hahahaha.

Its a 100% pure equity portfolio so it does diversification across various equities such as ETF and Funds etc.

As it invest mainly in the US market, there is the SGD to USD currency conversion risk to take note of. Best to invest directly using USD to mitigate this risk. However Syfe only allows you to deposit USD if the minimum amount is 10K USD.

As I deposit less than that amount, I have to use SGD and incur the currency conversion risk instead. 😐 Current its eating up about 20% of my total profits in this portfolio shugs!!! 😡

I see this portfolio as the highest potential with the highest returns so I am going all in for this portfolio compared to the other two that I have mentioned above.

Syfe Cash+ Portfolio

This is the newer kid on the block for Syfe (the next one is the newest 😂) and their returns are one of the highest for Cash Management accounts at 1.75% per annum. Yay means more money coming in haha 😁
It does not incur any management fee means zero fees for earning free money in a sense!
Just put your money in and go to sleep.

This one its ok to put in a small amount as the returns is fixed at 1.75% per annum. So whatever amount you put into this, you will just earn a fixed proportion from it. Its that simple hahahaha. 😂

Syfe 3 Core Portfolio

This is the newest feature that Syfe just launched last month.

It consists of three sub-group to choose as shown in the image.

It differentiates itself from its existing portfolios as this will instead invest in stocks in the China stock market, invest in Gold and also in Bonds as to balance the entire structure. This will provide some steel and stability besides just going into the US market and this will perform as an all rounded portfolio from what I perceived.

Each core portfolio will have different weights and proportion distributed across the stocks in US, China, Gold and Bonds allocation etc just like a 'Modern Portfolio Theory' methodology.

Currently I am not going to diversify and invest into this Core Portfolio has I am still focusing on my Equity100 portfolio. Its not a big deal to give this a miss for now haha.

4. Pros

Same Pros as Stashaway
Can start investing as low as 50 SGD (*that's how I first started haha. But of course there are cons for doing this too).
Returns higher than your bank savings account (0.05% P.A.) or Singapore Savings Bonds
Both desktop and mobile version. Mobile user interface is awesome!
Top up via Paynow, so convenient!
For those with limited investing knowledge and just starting out (One of the best place to start learning how investing works)
Portfolio has auto-rebalancing logic which will be taken care by the advisor
All you need to do is to top up money inside and let the magic happens hahahah 😀

5. Cons

Returns is slower and lower compared to individual growth stock purchase.
Pay monthly management fee (nothing is free and they help to balance your portfolio😁)
Funds invested are park in a custodian account which is not under your ownership and no security of money. So regardless of what the company says, exercise due diligence in the total amount you choose to put in here.

6. My Projects

1st: Stopped using Global ARI Portfolio (not the best)

2nd: Stopped using REIT+ Portfolio (only will go back and use once I have spare cash)

3rd: 100% Equity (using now)

4th: Cash+ (using now, going to stop as I have plans to use the amount for other investments)

5th: 3 Core Portfolio (not interested to diversify my resources and use this at the moment)

7. User Experience

Top up: ★★★★★

Easy of use, UI: ★★★★★

Effort to manage: ★✰✰✰✰

Fees: ★✰✰✰✰

Control of portfolio: ★✰✰✰✰

8. Referral Code:
If you have not signed up yet, can use my referral code 😆

Your first deposit into a portfolio (except for Cash+ portfolio) for $10,000 or less is $10 bonus

My referral code "SRPRT54VP".

Regardless of my project performances, please always do your homework and know what are the likely risks, whether you are comfortable to incur before topping up cash to invest. 😀

1 Comments

Financial Knowledge

Are You Guilty of Speculating The Stock Market?

By Marcus Seetoh - February 13, 2021

Everyone learns how to trade / invest differently in the stock market. No one is equal in terms of their knowledge and skills sets. Different strategies and methods are used both in the short term and long term approaches.

Some people learn directly from mentors / friends. Some people learn from paying money to attend courses from the more experienced traders / investors or even the so-called 'gurus'. There are those who read financial books or went through some form of certification or attend business school to learn their craft. Some people learn from 'FOMO' which is fear of missing out while there are those others who self-learn though searching the tons of free online resources while taking baby steps to test the market.

I was that one that build my craft through self-learning online. Although I did not study / learn through the appropriate channels, my main investing method is still the strong belief in conviction and not speculation as the way to go.

I will like to share some of the things that I experience happening around in real life but don't really see such active and open discussions about it.

What is Speculation?

In my own words without any definition from Google, executing a trade or to purchase something in the stock market with no proper fundamental and/or technical analysis done to the asset that you are trying to possess. There are no strong belief or basis present in the situation which could have convinced yourself that you must get a piece of the asset.

Speculation essentially is just 'Market Noise' which happens in the short term. Market noises are just distractions that provide you with additional information which may not help you to decided whether to invest or not to invest in that asset rationally.

1. Forums / Media / Earnings Report / Group Chats

Google.com

eg. Wallstreetbets Reddit forum started to gain traction worldwide in January 2021 where a group of retail investors wanted to perform a 'Short Squeeze' for certain stocks such as 'GameStop' which was shorted by institutional investors. By the time the news were out in the mainstream media, it was already too late to hop onto the profitable 'train'. The 'train' that was very profitable had already left the platform before the actual big news hit the media. There are some who were lucky to buy upon market news but the big question to ask yourself was whether did you think that you managed to go up the profitable train or the not profitable train?

Whatever happens after the news were broadcasted on the media was already considered as market noises. If you had the thought process of jumping on the next train (bandwagon) to buy low and sell high, my friend, you were already too late to enjoy the profits of those people who were the early majority to purchase 'Gamestop' shares or Options in December 2020.

You, being the latecomer gatecrashing into the party later in the night thinking of making a big buck but this action was only going to help out those early majority who bought alot of shares and Options to earn more money for them and not for yourself.

When you enter into the market at that time, you are helping to boost up the share prices of 'Gamestop' to exorbitant levels for a company that is clearly on a decline in their business model.

Moreover, with market noises there was no way one could actually tell whether the surge in stock prices will continue for how long more before everyone started to sell in a domino effect.

Stock market prices can be manipulated in the short term by many different market methods such as 'Pump & Dump', 'Short Squeeze' etc. Hence, this is a very high risk strategy of buying low and selling high because you may think that you got into the stock at the 'low' but it could be the 'high' that you got yourself into unknowingly. 😖

Furthermore, be extremely careful of buying or selling stocks when there are huge media frenzy such as the period of 27th to 29th January 2021. Because everyone wanted to get a piece of the action for Gamestop, people started to buy their shares and many of the brokerages (Robinhood, Tiger brokers etc) started to perform some form of order restrictions such as limiting people from buying shares of Gamestop.

But not sure why other non-speculative stock orders were affected in the process as well. On the 28th Jan 2021, I wanted to sell of some of my Options which had nothing to do with Wallstreetbets or even Gamestop but I was not able to do so on the Tiger Broker platform. My orders were not able to be processed during a 3 to 4 hours time window and this clearly affected my profit and losses for those options. I reached out to Tiger Broker customer service to lodge a complain to get them to do a thorough investigation. In the end, they push the ball away from them saying that its not their fault for orders not going through their platform and its the stock market issue due to the short squeeze of the Gamestock saga.

The moral of the story is that if you want to hop on to buying speculative stocks, be careful that your plan may not go according to what you want to do which is to make a quick buck to buy low and sell high. If the brokerage platform suddenly becomes unresponsive at that time duration when you want to sell your stock, good luck to you as the price might drop before your order is able to be processed by the brokerage platform and you will make huge losses instead.

2. FOMO from friends etc through Word of Mouth

Another more common type of market noise is listening to what people are buying and just go for it.

There is nothing wrong with listening to your friend's advice or listening to your friend sharing his/her shopping list or portfolio of stocks. But the key matter is he/she might tell you just half of the story that certain stock is good because of this reason and that reason but he/she will not be able to tell you when you should sell your stocks or how long you should hold your stocks for if you get what I mean.

eg. Someone might say Facebook stocks are good as they have competitive moat and have a history of positive revenues. Listening to these will make you wanna purchase a piece of their stocks even more.

But the fact of the matter is after you buy that stock, what's next you know??? How long should you hold the stock for? Should you purchase more shares in the near future? How much more shares to purchase if you want to? What is the fair value of Facebook stock now? At what price should you purchase more stocks? Should you sell your shares once you made some profit or buy and hold? How much profit you want to make before exiting? Should I hold it for 3 years?

These are the questions only you yourself can decide and no one is able to help you. Its very simple to just buy a stock based on what people says, but more importantly is can you manage the list of questions that I listed above once you owned that stock? If you cannot answer all those questions above, you purchased based on speculation.

What is Conviction?

In my own words without any definition from Google, executing a trade or to purchase something in the stock market with proper fundamental and/or technical analysis done to the asset that you are trying to possess. There are very strong belief or basis present in the situation which convinced you that you must get a piece of the asset.

You avoid market noises, those 'shiny news and metrics' and see investing / trading as a system with proper planning and calculated risk.

Conviction is something that is intrinsic in nature and you very much must know the business of that stock very well and is able to make a rational decision to buy its shares.

eg. when you want to purchase a stock with conviction, normally you don't buy what is popular on the news etc. You will first research on a basket of stocks that you are familiar with and from there, you study their business and slowly eliminate those that do not fit into your investing criteria. It is the same logic as dating where you network with different people of the opposite gender and you slowly cast out those people that do not meet your dating criteria if this makes the explanation relatable to you better. 😂
This really depends on what kind of investing method (dividends or capital appreciation) you use and this will ultimately affect what kind of stocks you should be searching for. eg. There are growth stocks, there are REITs stocks, there are dividend stocks and if you are risk-adverse there are also ETFs. There are also local Singapore stocks, overseas US and UK stocks so many to choose from hahahahaha.

Once you have filtered out a shopping wish list of stocks, depending on whether you believe in using fundamental analysis and / or technical analysis to purchase what you want from your wish list.

This includes setting up your stock holding duration, what price to enter or what price to exit, do you want to lump sum invest or DCA every month, set a stop loss plan or set a profit exit plan etc and many more such as portfolio diversification, allocation and optimization.

I hope this shed some light and enlighten you in one way or another in your investing journey. All your hard work happens before you enter a trade / order in the market and not after you enter the market then you start to plan when should I sell the stock, when should I buy more of the stock in the future etc. As always, do your due diligence before entering the market. 😀

1 Comments

Making Money While You Sleep With Syfe (Robo Advisor)

Are You Guilty of Speculating The Stock Market?

Last Blog Post Here. (Moving to Medium)

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